The BVI’s Financing and Money Services Act 2009 (the FMSA) was recently amended by the Financing and Money Services (Amendment) Act 2020 (the FMSA Amendment). The FMSA Amendment was signed by the Governor on 20 April 2020 and was published in the Gazette on 21 April 2020. The FMSA Amendment is not yet in force as a matter of law. It will come into force at a time still to be determined by the BVI government.
Some of the key features of the FMSA Amendment are:
- New withholding levy / tax introduced: Class A licensees, ie firms licensed by the BVI Financial Services Commission (BVI FSC) under the FMSA to carry on the business of money transmission, will be required to collect, at the time of providing the service to a customer, a transaction levy amounting to 7 per cent of the gross amount being transmitted (the Transaction Levy).
- Only international remittances are covered: The Transaction Levy applies only in relation to any monies that are being transmitted outside of the BVI.
- Bank transfers and wires are not in scope: Importantly, the Transaction Levy does not apply to any remittances sent to or received by any banks in the BVI. The requirement only applies to Class A licensees under the FMSA. Banks are regulated under a separate regime.
- Collection by the BVI FSC: The Transaction Levy will be collected by the BVI FSC from the Class A licensees on a monthly basis or on such period basis as the Commission may publish by notice in the Gazette.
- Levy will finance a new BVI ‘Miscellaneous Purposes’ Fund: The BVI Government will establish a fund to be known as the miscellaneous purposes fund (the Fund) and the BVI FSC will pay over the Transaction Levy into the Fund on a quarterly basis. The Government will allocate sums received by the Fund for various BVI social and infrastructure causes including senior citizen programmes, education and scholarships, agriculture and fishing and for a ‘land bank’ financing.
Where a Class A licensee fails to comply with the requirements under the FMSA Amendment the Commission has the ability to take enforcement action and impose administrative penalties which can range from US$100 to US$5,000. Where a person is found to be conducting money transmission business without the appropriate Class A licence the fine for a corporation could be US$75,000 and in the case of an individual US$60,000 or imprisonment for three years, or both.
A copy of the FMSA Amendment can be found here.